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GIM2091 | Accounting framework: annual accounting: comparison of accident year and underwriting year reporting: example

From HM Revenue & Customs · General Insurance Manual

Policy incepts on 1 January 2008; two year duration.

Premium £1000.

Claims £750 - £400 made in 2008 and £350 made in 2009.

80% of claims paid in year of claim and remaining 20% in following year.

Accident year basis

Accident Years-Annual accounts 2008Annual accounts 2009Annual accounts 2010Total
2008Premium paid1000---
-Unearned premium provision c/f(500)---
-Premium earned500 [A]---
-Outstanding claims b/f0---
-Claims paid320---
-Outstanding claims c/f80---
-Claims incurred400 [B]---
-Profit [A] - [B]100----
2009Premium paid-0-
-Unearned premium provision b/f-500--
-Unearned premium provision c/f-0--
-Premium earned-500 [C]--
-Outstanding claims b/f-(80)--
-Claims paid-360-
-Outstanding claims c/f-70--
-Claims incurred-350 [D]--
-Profit [C] - [D]-150--
2010Premiums paid/earned--0-
-Outstanding claims b/f--(70)-
-Claims paid--70-
-Outstanding claims c/f--0-
-Claims incurred--0-
Summary of profit-1001500250

Underwriting year basis

Underwriting year-Annual accounts 2008Annual accounts 2009Annual accounts 2010Total
2008Premium paid10000-1000
-Unearned premium provision b/f0500-500
-Unearned premium provision c/f(500)(0)-(500)
-Premium earned500500-1000
-Outstanding claims b/f0(80)(70)(150)
-Claims paid32036070750
-Outstanding claims c/f80700150
-Claims incurred4003500750
Net profit1001500-
Profit---250